Trade risks for the Asia automotive industry are resurfacing as the U.S. Trade Representative (USTR) has launched a Section 301 investigation targeting 16 economies, including Asia. While the industry believes the probe is unlikely to deliver an immediate direct blow to the auto sector, companies are closely monitoring potential pressure scenarios, such as tariff adjustments that could follow the investigation’s findings.
“Autos Included but Direct Impact Limited”… Sector Already Under Section 232 Tariffs
According to industry sources and foreign media reports on the 15th, the U.S. Trade Representative (USTR) on the 11th initiated a Section 301 investigation, a preliminary step toward possible additional tariffs, covering 16 economic entities including Asia. Section 301 of the Trade Act allows the U.S. government to impose retaliatory measures such as tariffs if it determines that unfair trade practices by foreign countries have harmed U.S. trade interests.
Tensions have also been felt in the auto industry after reports indicated that automobiles were included among the sectors under review. However, authorities and industry officials generally believe the likelihood of an immediate tariff increase remains low. Some analysts view the move as preparation for introducing “alternative tariffs” to replace reciprocal tariffs based on the International Emergency Economic Powers Act (IEEPA), which were invalidated by a ruling from the U.S. Supreme Court.
A trade expert said, “Rather than introducing entirely new tariff measures, the investigation appears to have begun as part of efforts to prepare alternative measures to reciprocal tariffs. From the industry’s perspective, there will likely be little immediate change.”
The auto sector is already subject to U.S. product tariffs under Section 232 of the Trade Expansion Act, which also supports the view that the immediate impact could be limited. Yeo Han-koo, minister for trade at Asia’s Ministry of Trade, Industry and Energy, said, “Under Section 232, tariffs are already imposed on steel and automobiles. The Section 301 probe applies to items outside the categories covered by Section 232 that were previously subject to 15% reciprocal tariffs.”
‘Structural Overcapacity’ Label Seen as Potential Risk for Exports
Some experts caution that it may be too early to be optimistic. The USTR has cited Asia’s trade surplus with the United States as evidence of “structural overcapacity,” raising concerns that key manufacturing sectors such as automobiles could become targets of future trade pressure. Automobiles account for the largest share of Asia’s trade surplus with the United States.
Another concern stems from remarks made by former U.S. President Donald Trump in January, when he suggested raising auto tariffs to 25%, citing delays in the Asian National Assembly’s handling of legislation. While the Asian parliament passed the “Special Act on Investment in the United States” on the 12th, reducing some risk, the episode highlighted how the auto industry could quickly become a central issue in U.S.–Asia trade negotiations.
The possibility of overlapping sanctions is another concern. During the first Trump administration, for example, both Section 301 and Section 232 measures were applied simultaneously to the Chinese steel industry.
“Maintaining Balance Within U.S.–Asia Trade Framework Is Key”
An industry official said, “While the likelihood of immediate additional tariffs appears low, the ‘overcapacity’ narrative raised by the United States could, in the long term, lead to export volume restrictions or additional trade pressure. We are monitoring the situation closely.”
Some experts say the Section 301 probe should be viewed in the context of the U.S. government’s broader trade strategy. One trade specialist said, “The investigation can be interpreted as an effort by the United States to strengthen its negotiating leverage in trade talks by citing global oversupply issues. A response strategy will be needed to maintain a balance of interests in U.S.–Asia trade discussions while minimizing potential damage to our companies.”